M/s. N.L. Yadav & Co., Kolkata V. ITO, Ward - 28(2), Kolkata, Kolkata

CO 97/KOL/2010

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0572 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 8 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-04-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 26-07-2010
• Court: TRIBUNAL
• Department Lawyers: P K CHAKRABORTY
• Assessee Lawyers: CROSS OBJECTOR SHRI PIJUSH DEY
• Keywords: Audit objection; Retrospective amendment; Question of law; Tax effect
• Section: 260A; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI B. P. JAIN, AM ] I.T.A NO. 12 40 /KOL/201 0 ASSESSMENT YEAR : 200 5 - 06 INCOME - TAX OFFICER, WD - 28(2), KOLKATA. VS. M/S. N. L. YADAV & COMPANY (PAN: AAEFN0433A) ( APPELLANT ) ( RESPONDENT ) & C.O. NO. 97 /KOL/201 0 IN I.T.A NO. 12 40 /KOL/201 0 ASSESSMENT YEAR : 200 5 - 0 6 M/S. N. L. YADAV & COMPANY VS. INCOME - TAX OFFICER, WD - 28(2), KOLKATA. (CROSS OBJECTOR) (RESPONDENT) DATE OF HEARING: 0 9 .0 4 .2015 DATE OF PRONOUNCEMENT: 09 . 04 . 2015 FOR THE REVENUE : S HRI P. K. CHAKRABORTY , JCIT FOR THE ASSESSEE/CROSS OBJECTOR : SHRI PIJUSH DEY, FCA ORDER PER SHRI MAHAVIR SINGH, JM: BOTH , TH IS APPEAL AND THE CROSS OBJECTION FILED BY REVENUE AND ASSESSEE RESPECTIVELY ARE ARISING OUT OF ORDER OF CIT (A) - XIV, KOLKATA , IN APPEAL NO . 215/CIT(A) - XIV/08 - 09 DATED 2 9 . 0 3 .201 0 . ASSESSMENT WAS FRAMED BY ITO, WARD - 28(2), KOLKATA U/S. 147/ 14 3(3) OF THE INCOM E - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 200 5 - 0 6 VIDE HIS ORDER DATED 01 .1 0 .20 08 . 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STATED THAT TAX EFFECT IN THIS APPEAL OF REVENUE IS BELOW THE PRESCRIBED MONETARY LIMITS F OR FILING OF APPEALS BEFORE ITAT. IN THIS APPEAL OF REVENUE, THE QUANTUM INVOLVED IS RS. 6,34,876 / - ON WHICH TOTAL TAX EFFECT IS RS.1,90,500/ - , WHICH IS BELOW RS. 4 LAKHS. THE APPEAL RELATES TO ASSESSMENT YEAR 2005 - 06 AND FILED BEFORE THE TRIBUNAL ON 16 .0 6 .201 0 . LD COUNSEL FOR THE ASSESSEE STATED THAT IN VIEW OF THE RECENT INSTRUCTION NO. 5/2014 ISSUED BY CBDT ON 10.07.2014 REVISING MONETARY LIMITS FOR FILING OF APPEAL BEFORE ITAT FIXING THE TAX EFFECT LIMIT OF RS. 4 LACS, THE SAME IS NOT MAINTAINABLE AN D LIABLE TO BE DISMISSED IN LIMINE. THE ONLY ISSUE NOW REMAINS BEFORE US IS, WHETHER, THIS APPEAL OF REVENUE, WHICH IS BELOW THE PRESCRIBED LIMIT OF TAX EFFECT IN VIEW OF THE BOARD S INSTRUCTION NO.5/2014 ISSUED ON 2 ITA NO. 1240 /K/201 0 & C.O. NO. 97/KOL/2010 N. L. YADAV & CO. AY 200 5 - 06 10.07.2014 REVISING THE MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE ITAT IS MAINTAINABLE OR NOT. LD. SR - DR DREW OUR ATTENTION TO PARA - 11 OF THE INSTRUCTION AND ARGUED THAT THIS WILL APPLY TO THE APPEALS FILED ON OR AFTER 10.07.2014 AND NOT TO THE APPEAL FILED PRIOR TO 10 . 07.2 014. HENCE, HE VEHEMENTLY OPPOSED THE ARGUMENT OF LD. COUNSEL FOR THE ASSESSEE AND STATED THAT THIS INSTRUCTION IS PROSPECTIVE AND NOT RETROSPECTIVE. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTS ET, IT IS SEEN THAT HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS M/S. P. S. JAIN & CO. IN ITA NO.179/1991 DATED 02.08.2010 HAS HELD AS UNDER: THIS COURT CAN VERY WELL TAKE JUDICIAL NOTICE OF THE FACT THAT BY PASSAGE OF TIME MONEY VALUE HAS GONE DOWN, T HE COST OF LITIGATION EXPENSES HAS GONE UP, THE ASSESSEES ON THE FILE OF THE DEPARTMENTS HAVE BEEN INCREASED CONSEQUENTLY, THE BURDEN ON THE DEPARTMENT HAS ALSO INCREASED TO A TREMENDOUS EXTENT. THE CORRIDORS OF THE SUPERIOR COURTS ARE CHOCKED WITH HUGE P ENDENCY OF CASES. IN THIS VIEW OF THE MATTER, THE BOARD HAS RIGHTLY TAKEN A DECISION NOT TO FILE REFERENCES IF THE TAX EFFECT LESS THAN RS. 2 LAKHS. THE SAME POLICY FOR OLD MATTERS NEED S TO BE ADOPTED BY THE DEPARTMENT. IN OUR VIEW, THE BOARD S CIRCULAR DATED MARCH 27, 2000 IS VERY MUCH APPLICABLE EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDECIDED. THE DEPARTMENT IS NOT JUSTIFIED IN PROCEEDING WITH THE OLD REFERENCES WHEREIN THE TAX IMPACT IS MINIMAL. THUS, THERE IS NO JUSTIFICATION TO PROCEED S WITH DECADES OLD REFERENCES HAVING NEGLIGIBLE TAX EFFECT. SIMILARLY, HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. SURESHCHANDRA DURGAPRASAD KHATOD (HUF) (2012) 253 CTR 492 (GUJ) HAS SPECIFICALLY CONSIDERED INSTRUCTION NO. 3/2011 AND HELD THAT THE SAME WOU LD APPLY TO PENDING CASES AS WELL EVEN THOUGH THERE WAS A SPECIFIC CONDITION IN THAT INSTRUCTION ALSO THAT THE SAME WOULD APPLY TO APPEALS FILE ON OR AFTER FEBRUARY, 2011. HON BLE HIGH COURT HAS CONSIDERED THIS ISSUE AS UNDER: - 6. THE QUESTION ABOUT APPLIC ABILITY OF INSTRUCTION NO.3 OF 2011 HAD BEEN CONSIDERED AND DECIDED BY THE AURANGABAD BENCH OF THE BOMBAY HIGH COURT IN TAX APPEAL NO. 78 OF 2007, THE COMMISSIONER OF INCOME TAX V. SMT. VIJAYA V. KAVEKAR DECIDED ON 29.7.2011. THE DIVISION BENCH, AFTER CONS IDERING EARLIER INSTRUCTIONS AND VARIOUS DECISIONS OF THE COURTS ON INSTRUCTIONS, RELYING ON THE DECISION IN COMMISSIONER OF INCOME TAX VS. MADHUKAR K. INAMDAR (HUF) REPORTED IN (2010) 229 CTR (BOM) 77, HAS HELD IN PARAGRAPHS 9, 10, 11, 14 AND 17 AS UNDER: '9. AS STATED EARLIER, THE INCOME TAX ACT WAS AMENDED AND SECTION 268A HAS BEEN INTRODUCED ON THE STATUTE BOOK WITH RETROSPECTIVE EFFECT. SECTION 268A CARVES OUT AN EXCEPTION FOR FILING OF APPEALS AND REFERENCES UNDER SECTION 260 A OF THE ACT. THE LEGISLAT URE HAS PRESCRIBED THAT THE CBDT IS EMPOWERED TO ISSUE CIRCULARS AND INSTRUCTIONS FROM TIME TO TIME, WITH REGARD TO FILING OF APPEALS DEPENDING ON THE TAX EFFECT INVOLVED. 3 ITA NO. 1240 /K/201 0 & C.O. NO. 97/KOL/2010 N. L. YADAV & CO. AY 200 5 - 06 THEREAFTER, IN 2008, CBDT INSTRUCTION NO. 5 OF 2008 DATED 15TH MAY, 2008 WAS ISSUE D. THIS COURT IN THE CASE OF 'COMMISSIONER OF INCOME TAX V/S MADHUKAR K. INAMDAR (HUF) REPORTED IN '(2010) 229 CTR (BOM) 77, INTERPRETED THE AFORESAID CIRCULAR. THE CIRCULAR WAS ISSUED IN SUPERSESSION OF ALL EARLIER INSTRUCTIONS ISSUED BY THE BOARD. THE MO NETARY LIMIT WAS INCREASED AND APPEALS WERE TO BE FILED UNDER SECTION 260A, THEREAFTER, ONLY IN CASES WHERE THE TAX EFFECT EXCEEDED RS. 4 LACS. PARAGRAPH 11 OF THAT INSTRUCTION STIPULATED THAT IT WAS APPLICABLE TO APPEALS FILED ON OR AFTER 15TH MAY, 2008. IT WAS FURTHER PROVIDED THAT IN CASES, WHERE APPEALS WERE FILED BEFORE 15TH MAY, 2008, THEY WOULD BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT WHICH WERE OPERATIVE AT THE TIME WHEN SUCH APPEALS WERE FILED. THE INSTRUCTION WAS ISSUED UNDER SECTION 268A(1 ) OF THE ACT. THE ARGUMENT OF THE LEARNED COUNSEL FOR THE REVENUE IN THAT CASE WAS, THAT THE INSTRUCTION ISSUED ON 15TH MAY, 2008 DID NOT PRECLUDE THE DEPARTMENT FROM CONTINUING WITH THE APPEALS AND/OR PETITIONS FILED PRIOR TO 15TH MAY, 2008, IF THEY INVOL VED A SUBSTANTIAL QUESTION OF LAW OF A RECURRING NATURE, NOTWITHSTANDING THE FACT THAT THE TOTAL CUMULATIVE TAX EFFECT INVOLVED IN THE APPEALS WAS LESS THAN RS. 4 LACS. IT WAS SUBMITTED, SUCH APPEALS WHICH WERE FILED PRIOR TO THE ISSUANCE OF INSTRUCTION AN D WHERE SUBSTANTIAL QUESTIONS OF LAW WERE RAISED, WERE REQUIRED TO BE DECIDED ON MERITS. THE COURT, WHILE CONSIDERING THE ISSUE OBSERVED THAT PARAGRAPH 5 OF THE CIRCULAR MADE IT CLEAR THAT NO APPEALS WOULD BE FILED IN THE CASES INVOLVING TAX EFFECT LESS TH AN RS. 4 LACS NOTWITHSTANDING THE ISSUE BEING OF RECURRING NATURE. RELYING ON THE JUDGEMENT IN CIT V/S POLYCOTT CORPORATION, THE COURT OBSERVED AS FOLLOWS: '6 THE AFORESAID JUDICIAL VERDICT MAKES IT CLEAR THAT THE CIRCULAR DT. 15TH MAY, 2008 IN GENERAL A ND PARA (5) THEREOF IN PARTICULAR LAY DOWN THAT EVEN IF THE SAME ISSUE, IN RESPECT OF SAME ASSESSEE, FOR OTHER ASSESSMENT YEARS IS INVOLVED, EVEN THEN THE DEPARTMENT SHOULD NOT FILE APPEAL, IF THE TAX EFFECT IS LESS THAN RS. 4 LAKHS. IN OTHER WORDS, EVEN I F THE QUESTION OF LAW IS OF RECURRING NATURE EVEN THEN, THE REVENUE IS NOT EXPECTED TO FILE APPEALS IN SUCH CASES, IF THE TAX IMPACT IS LESS THAN THE MONETARY LIMIT FIXED BY THE CBDT.' 7. ONE FAILS TO UNDERSTAND HOW THE REVENUE, ON THE FACE OF THE ABOVE CLEAR INSTRUCTIONS OF THE CBDT, CAN CONTEND THAT THE CIRCULAR DT. 15TH MAY, 2008 ISSUED BY THE CBDT IS APPLICABLE TO THE CASES FILED AFTER 15TH MAY, 2008 AND IN COMPLIANCE THEREOF, THEY DO NOT FILE APPEALS, IF THE TAX EFFECT IS LESS THAN RS. 4 LAKHS; BUT T HE SAID CIRCULAR IS NOT APPLICABLE TO THE CASES FILED PRIOR TO 15TH MAY, 2008 I.E. TO THE OLD PENDING APPEALS, EVEN IF THE TAX EFFECT IS LESS THAN RS. 4 LAKHS. IN OUR VIEW, THERE IS NO LOGIC BEHIND THIS BELIEF ENTERTAINED BY THE REVENUE.' THE COURT HAS F URTHER HELD THAT THE PREVAILING INSTRUCTIONS FIXING THE MONETARY LIMIT FOR THE TAX EFFECT WOULD HOLD GOOD EVEN FOR PENDING CASES. ACCORDINGLY, THE COURT DISMISSED ALL THE APPEALS HAVING A TAX EFFECT OF LESS THAN RS. 4 LACS. 10. THE NEW CBDT INSTRUCTIONS HAVE BEEN ISSUED ON 9TH FEBRUARY, 2011, BEING INSTRUCTION NO. 3 OF 2011. THE MONETARY LIMIT HAS BEEN RAISED AGAIN AND CLAUSE 3 OF THE INSTRUCTIONS PROVIDES THAT APPEALS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS PR ESCRIBED, HENCEFORTH. THE MONETARY LIMITS PRESCRIBED FOR FILING AN APPEAL UNDER SECTION 260A BEFORE THE HIGH COURT HAS BEEN RAISED TO RS. 10 LACS. THIS INSTRUCTION IS IDENTICAL TO THE CBDT INSTRUCTION NO. 5 OF 2008. CLAUSE 10 OF THIS CIRCULAR INDICATES THA T MONETARY LIMITS WOULD NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME TAX. IT FURTHER PROVIDES THAT WHERE 4 ITA NO. 1240 /K/201 0 & C.O. NO. 97/KOL/2010 N. L. YADAV & CO. AY 200 5 - 06 THE TAX EFFECT IS NOT QUANTIFIABLE, THE DEPARTMENT SHOULD TAKE A DECISION TO FILE APPEALS ON MERITS OF EACH CASE. CLAUSE 11, AGAI N PROVIDES THAT THE INSTRUCTION WOULD APPLY TO APPEALS FILED ON OR AFTER 07.02.2011 AND APPEALS FILED BEFORE 07.02.2011 WOULD BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEALS WERE FILED. 11. IN OUR OPINION, WHEN A SIMILAR CLAUSE HAS BEEN INTERPRETED BY THE DIVISION BENCH OF THIS COURT IN CIT VS. MADHUKAR INAMDAR (SUPRA), THE SAME PRINCIPLES MUST APPLY IN THE PRESENT CASES ALSO, AS WE HAVE FOUND THAT THE INSTRUCTIONS OF 15TH MAY, 2008 IS PARA - MATERIAL WITH THE INSTR UCTION OF 9TH FEBRUARY, 2011. 14. SIMILARLY, THE DELHI HIGH COURT IN THE CASE OF 'COMMISSIONER OF INCOME TAX V/S DELHI RACE CLUB LTD.', DECIDED ON MARCH 03, 2011, BY RELYING ON ITS EARLIER JUDGEMENT 'COMMISSIONER INCOME TAX DELHI - III V/S M/S P.S. JAIN AN D CO. DECIDED ON 2ND AUGUST, 2010 HAS HELD THAT THE CBDT CIRCULAR RAISING THE MONETARY LIMIT OF THE TAX EFFECT TO RS. 10 LACS WOULD BE APPLICABLE TO PENDING CASES ALSO. 17. IT IS TRUE THAT THIS JUDGEMENT IN CHHAJER'S CASE (SUPRA) WAS NOT BROUGHT TO THE NOTICE OF THE DIVISION BENCH, WHILE DECIDING EITHER MADHUKAR'S CASE (SUPRA) OR THE CASE OF POLYCOT CORPORATION (SUPRA). HOWEVER, THE INSTRUCTION OF 2005 WHICH WAS CONSIDERE D IN CHHAJER'S CASE HAS ALSO BEEN INTERPRETED IN POLYCOT CORPORATION (SUPRA). THE CONSISTENT VIEW OF THE COURT HAS BEEN THAT THE CBDT INSTRUCTION WOULD APPLY TO PENDING CASES AS WELL. THE MAIN OBJECTIVE OF SUCH INSTRUCTIONS IS TO REDUCE THE PENDING LITIGAT ION WHERE THE TAX EFFECT IS CONSIDERABLY SMALL. THEREFORE, IN OUR OPINION, THE TAX APPEALS ARE REQUIRED TO BE DISMISSED, AS THEY ARE NOT MAINTAINABLE IN VIEW OF THE PROVISIONS OF SECTION 268A OF THE INCOME TAX, AND THE CBDT INSTRUCTION NO. 3 OF 2011.' 7. THE SAME VIEW HAS BEEN TAKEN BY THE KARNATAKA HIGH COURT IN ITA NO.3191 OF 2005 IN THE COMMISSIONER OF INCOME - TAX VS. M/S. RANKA & RANKA DECIDED ON 2.11.2011, WHEREIN THE DIVISION BENCH HAS CONSIDERED INSTRUCTION NO.3 AND THE NATIONAL LITIGATION, POLICY, HAD HELD AS UNDER: '(I) INSTRUCTION NO.3/11 IS ALSO APPLICABLE TO THE PENDING APPEALS. (II) AS THE TAX EFFECT IN THE INSTANT CASE IS LESS THAN RS.10 LAKHS, THE APPEAL STANDS DISMISSED ON THE GROUND OF MONETARY LIMIT, WITHOUT EXPRESSING ANY OPINION ON THE MERITS OF THE CLAIM, MAKING IT CLEAR THAT THE DEPARTMENT IS AT LIBERTY TO PROCEED AGAINST THE ASSESSEE IN FUTURE, IF THERE ANY AMOUNT DUE FROM THE ASSESSEE, ON SIMILAR ISSUE AND IF IT IS ABOVE THE MONETARY LIMIT PRESCRIBED.' 4. WE FIND FROM THE ABOVE CASE LAW OF HON BLE GUJARAT HIGH COURT IN THE CASE OF SURESHCHANDRA DURGAPRASAD KHATOD (HUF), (SUPRA) THAT IN THE SIMILAR SITUATION AND EXACTLY IDENTICAL INSTRUCTIONS WERE APPLIED TO THE APPEALS FILED RETROSPECTIVELY. HON BLE GUJARAT HIGH COURT HAS DISCUS SED THAT ALMOST ALL HIGH COURTS ARE OF THE UNANIMOUS VIEW, CONSIDERING THE MAIN OBJECTIVE OF SUCH INSTRUCTIONS THAT TO REDUCE THE PENDING LITIGATION, WHERE THE TAX EFFECT IS CONSIDERABLE LOW OR SMALL, THE APPEAL IS NOT MAINTAINABLE. THE RECENT INSTRUCTION REVISING THE MONETARY LIMIT TO RS. 4 LAKH FOR FILING APPEAL BEFORE ITAT ON INCOME TAX MATTERS, AS ISSUED VIDE INSTRUCTION NO.5/2014 5 ITA NO. 1240 /K/201 0 & C.O. NO. 97/KOL/2010 N. L. YADAV & CO. AY 200 5 - 06 FNO279/MISC.142/2007 - ITJ(PT) DATED 10 TH JULY, 2014 WILL APPLY TO PENDING APPEALS ALSO FOR THE REASON THAT THE SAME IS EXACTL Y IDENTICAL TO EARLIER INSTRUCTIONS. THE RELEVANT CIRCULAR ISSUED BY CBDT READS AS UNDER: REFERENCE IS INVITED TO BOARD S INSTRUCTION NO 3/2011 DATED 09/02/2011 WHEREIN MONETARY LIMITS AND OTHER CONDITIONS FOR FILING DEPARTMENTAL APPEALS (IN INCOME - TAX MATTERS) BEFORE APPELLATE TRIBUNAL, HIGH COURTS AND SUPREME COURT WERE SPECIFIED. 2. IN SUPERSESSION OF THE ABOVE INSTRUCTION, IT HAS BEEN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BEFORE APPELLATE TRIBUNAL, HIGH COURTS AND SUP REME COURT KEEPING IN VIEW THE MONETARY LIMITS AND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH APPEALS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: - S NO. APPEALS IN INCOME - TAX MATTERS MONETARY LIMITS (IN RS) 1 BEFORE APPELLATE TRIBUNAL 4,00,000/ - 2 U/S 260A BEFORE HIGH COURT 10,00,000/ - 3 BEFORE SUPREME COURT 25,00,000/ - IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETARY LIMITS PRESCRIBED ABOVE. FILING OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIF FERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS D ISPUTED ISSUES ). HOWEVER THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. 5. THE A SSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL, CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIED IN PARA 3 . NO APPEAL SHALL BE FILED IN RESPECT OF AN ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3 . IN OTHER WORDS, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHICH INVOL VES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX EFFECT IS LESS THAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), IF IT IS DECIDED TO FILED APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFEC T EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER / JUDGMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 6. IN A CASE WHERE APPEAL BEF ORE A TRIBUNAL OR A COURT IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN THE MONETARY LIMIT SPECIFIED ABOVE, THE COMMISSIONER OF INCOME - TAX SHALL SPECIFICALLY RECORD THAT EVEN THOUGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FILE D ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN THIS 6 ITA NO. 1240 /K/201 0 & C.O. NO. 97/KOL/2010 N. L. YADAV & CO. AY 200 5 - 06 INSTRUCTION . FURTHER, IN SUCH CASES, THERE WILL BE NO PRESUMPTION THAT THE INCOME - TAX DEPARTMENT HAS ACQUIESCED IN THE DECISION ON THE DISPUTED ISSUES. THE I NCOME - TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM FILING AN APPEAL AGAINST THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFECT EXCEEDS THE SPECIFIED MONETARY LIMITS. 7. IN THE PAST, A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE BARD, WHEREBY AN ASSESSEE HAS CLAIMED RELIEF FROM THE TRIBUNAL OR THE COURT ONLY ON THE GROUND THAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DECI SION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR ANY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER CASE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, BY NOT FILING AN APPEAL ON THE SAME DISPUTED ISSUES. THE DEPARTMENTAL REPRESENTATIVES/COUNSE LS MUST MAKE EVERY EFFORT TO BRING TO THE NOTICE OF THE TRIBUNAL OR THE COURT THAT THE APPEAL IN SUCH CASES WAS O TILED OR NOT ADMITTED ONLY FOR THE REASON OF THE TAX EFFECT BEING LESS THAN THE SPECIFIED MONETARY LIMIT AND, THEREFORE, NO INFERENCE SHOULD B E DRAWN THAT THE DECISIONS RENDERED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT. ACCORDINGLY, THEY SHOULD IMPRESS UPON THE TRIBUNAL OR THE COURT THAT SUCH CASES DO NOT HAVE ANY PRECEDENT VALUE. AS THE EVIDENCE OF NOT FILING APPEAL DUE TO THIS INSTRUCTION MAY HAVE TO BE PRODUCED IN COURTS, THE JUDICIAL FOLDERS IN THE OFFICE OF CIT MUST BE MAINTAINED IN A SYSTEMIC MANNER FOR EASY RETRIEVAL. 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT E NTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT. (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR (B) WHERE BOARD S ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT. 9. THE PROPOSAL FOR FILING SPECIAL LEAVE PETITION UNDER ARTICLE 136 OF THE CONSTITUTION BEFORE THE SUPREME COURT SHOULD, IN ALL CASES, BE SENT TO THE DIRECTORATE OF INCOME - TAX (LEGAL & RESEARCH), NEW DELHI AND THE DECISION TO FILE SPECIAL LEAVE PETITION SHALL BE IN CONSULTATION WITH THE MINISTRY OF LAW AND JUSTICE. 10. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE SHALL NOT A PPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME TAX. FILING OF APPEALS IN OTHER DIRECT TAX MATTERS SHALL CONTINUE TO BE GOVERNED BY THE RELEVANT PROVISIONS OF STATUTE & RULES. FURTHER FILING OF APPEAL IN CASES OF INCOME TAX, WHERE THE TAX EFF ECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUCH AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTION 12 A OF THE IT ACT, 1961, SHALL NOT BE GOVERNED BY THE LIMITS SPECIFIED IN PAR 3 ABOVE AND DECISION TO FILE APPEAL IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR CASE. 11. THIS INSTRUCTION WILL APPLY TO APPEALS FILED ON OR AFTER 10 TH JULY, 2014. HOWEVER, THE CASES WHERE APPEALS HAVE BEEN FILED BEFORE 10 TH JULY, 2014 WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TI ME WHEN SUCH APPEAL WAS FILED. 12. THIS ISSUE UNDER SECTION 268A (1) OF THE INCOME - TAX ACT 1961. 5. ON QUERY FROM THE BENCH, THE LD. DR COULD NOT POINT OUT ANY OF THE EXCEPTIONS AS PROVIDED IN THE CIRCULAR AS UNDER: 7 ITA NO. 1240 /K/201 0 & C.O. NO. 97/KOL/2010 N. L. YADAV & CO. AY 200 5 - 06 (A) THAT THIS IS A LOSS CASE HAVING TAX EFFECT MORE THAN THE PRESCRIBED LIMIT, WHICH SHOULD BE TAKEN INTO ACCOUNT, (B) THAT THIS IS A COMPOSITE ORDER FOR MANY ASSESSMENT YEARS WHERE TAX EFFECT WILL BE MORE THAN THE PRESCRIBED LIMIT AS PER PARA 5 OF ABOVE INSTRUCTIONS, (C) THAT THIS IS A CASE , WHERE, IN THE CASE OF REVENUE, WHERE CONSTITUTIONAL VALIDITY OF THE PROVISION OF THE ACT OR I.T. RULES 1962 ARE UNDER CHALLENGE, (D) THAT BOARD S ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, (E) THAT REVENUE A UDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT AND THE SAME IS UNDER CHALLENGE. THE LD. DR COULD NOT POINT OUT ANY OF THE EXCEPTIONS AS PROVIDED ABOVE. ACCORDINGLY, THIS BEING A LOW TAX EFFECT CASE, WE DISMISS THE APPEAL OF THE REVENUE IN LIMINE WITHOUT GOING INTO MERITS. 6 . COMING TO CROSS OBJECTION OF ASSESSEE. THE ONLY ISSUE IN THIS CROSS OBJECTION OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE ACTION OF AO IN DISALLOWING THE LABOUR PAYMENTS BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WITHOUT D EDUCTION OF TDS U/S. 194C OF THE ACT AMOUNTING TO RS.11,95,055/ - . 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS CLAIMED EXPENSES UNDER THE HEAD LABOUR CHARGES AT R S.11,95,055/ - . THE AO REQUIRED THE ASSESSEE WHETHER IT HAS DEDUCTED TDS OR NOT. THE ASSESSEE REPLIED THAT IT IS NOT DEDUCTED TDS U/S. 194C OF THE ACT. THE AO INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT MADE DISALLOWANCE ON ACCOUNT OF LABOUR C HARGES AT RS.11,95,055/ - . AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER: I HAVE CONSIDERED THE ABOVE SUBMISSION OF THE A / R. IT IS SEEN THAT T HE ASSESSEE IS A FIRM WHO HAS PAID CERTAIN AMOUNTS TO THE ABOVE MENTIONED SEVEN PARTIES FOR SUPPLY OF LABOUR FOR CARRYING OUT SOME WORK FOR ITSELF. SINCE THE PAYMENT TO EACH OF THESE PARTIES WAS MORE THAN RS. 50,000 / - , AS PER SECTION 194C, THE ASSESSEE SHOULD HAVE DEDUCTED TDS ON PAYMENTS MADE TO THEM. THE ARGUMENT OF THE A / R THAT TDS ON PAYMENTS TO THESE PARTIES IS NOT DEDUCTIBLE SINCE THERE IS NO CONTRACT WITH THEM CANNOT BE ACCEPTED. SECTION 194C DOES NOT REQUIRE THAT THESE SHOULD BE A WRITTEN CONTRACT BETWEEN THE ASSESSEE AND THE SUPPLIER OF LABOUR. WHEN EVER LABOUR IS SUPPLIED THE TWO PARTIES DECIDE THE TERMS AND CONDITIONS FOR THE SUPPLY BEFORE STARTING THE WORK. THEY DECIDE ABOUT THE WORK TO BE DONE, NUMBER OF LABOURS TO BE DEPLOYED AND THE AMOUNT TO BE PAID - WHICH MAY BE LUMP SUM AMOUNT OR PER LABOUR PER DAY AMOUNT. SINCE THESE THINGS ARE TO BE DECIDED IN ADVANCE THERE IS ALWAYS A CONTRACT WHEN ANY LABOUR IS SUPPLIED FOR CARRYING OUT ANY WORK. THIS CONTRACT IS AN ORAL CONTRACT AND IT NEED NOT BE IN WRITING ALWAYS. THE A / R HAS REFERRED TO HON'BLE SUPRE ME COURT DECISION IN THE CASE OF HINDUSTAN COCOCOLA 8 ITA NO. 1240 /K/201 0 & C.O. NO. 97/KOL/2010 N. L. YADAV & CO. AY 200 5 - 06 BEVERAGE (P). LTD. I FEEL THAT THIS DECISION WILL NOT BE APPLICABLE HERE BECAUSE IT IS RELATED TO A MATTER OF LOWER DEDUCT I ON OF TDS. AGGRIEVED AGAINST THE ORDER OF CIT(A), ASSESSEE FILED THIS CROSS OBJ ECTION BEFORE ITAT. 8 . WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE HAS CONTESTED ONLY THAT NO CONTRACT EXISTS WITH SUB - CONTRACTORS AND IN FACT THE LABOURERS ARE SECURED FROM LABOUR MARKET AND LABOUR PAYMENTS ARE MOSTLY MADE DIRECTLY TO THE LABOURERS OR THROUGH IDENTIFIERS. WE FIND FROM THE LEDGER ACCOUNT OF THE ASSESSEE THAT THESE PAYMENTS ARE MADE THROUGH SUB - CONTRACTORS AND THESE PAYMENTS ARE COVERED BY THE PROVISION OF SECTION 194C OF THE ACT WHE THER BY WAY OF ORAL CONTRACT OR WRITTEN CONTRACT. THE ASSESSEE HAS NOT DEDUCTED TDS ON THESE PAYMENTS. HENCE, THE AO HAS RIGHTLY INVOKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. AS REGARDS THE PLEA OF THE ASSESSEE IN RESPECT TO ORAL CONTRACT, WE ARE CONSISTENTLY FOLLOWING THE DECISION OF THIS COORDINATE BENCH IN THE CASE OF DCIT VS. KAMAL MUKHERJEE & CO. (SHIPPING) (P) LTD. ITA NO. 199/KOL/2010, WHEREIN IT IS HELD AS UNDER: (FROM HEAD NOTES) .UNDOUBTEDLY, THESE DECISIONS DO INDICATE THAT THER E IS A WORKMAN EMPLOYER RELATIONSHIP BETWEEN THE DOCK WORKERS AND THE STEVEDORES LIKE ASSESSEE WHEN THEY EMPLOY THOSE WORKERS, BUT BE THAT AS IT MAY, THE FACT REMAINS THAT THE ASSESSEE HAS MADE PAYMENTS TO THE CDLB FOR SUPPLY OF LABOUR, EVEN WHEN THIS LABO UR MAY BE TREATED AS EMPLOYED BY THE ASSESSEE FOR ALL PRACTICAL PURPOSES, THE PROVISIONS OF SECTION 194C ARE CLEARLY ATTRACTED. IN SUCH A SITUATION, I.E. WHEN LABOUR HIRED BY THE ASSESSEE THROUGH CDLB IS CONSIDERED TO BE IN ASSESSEE S EMPLOYMENT, THE PAYME NTS MADE TO CDLB CANNOT BE TREATED AS PAYMENTS FOR ANY WORK, BUT NEVERTHELESS THESE PAYMENTS COULD STILL BE COVERED BY THE PROVISIONS OF SECTION 194C BECAUSE THESE ARE PAYMENTS MADE FOR SUPPLY OF LABOUR WHICH ARE SPECIFICALLY COVERED BY SECTION 194C(1). CD LB IS AN AGENT OF THE STEVEDORES LIKE THE ASSESSEE IN THE SENSE THAT THE LABOUR IS RECRUITED BY THE ASSESSEE THROUGH CDLB, BUT WHEN THIS FACT DOES NOT AFFECT THE NATURE OF PAYMENT BY THE ASSESSEE TO THE CDLB WHICH IS ADMITTEDLY IN THE NATURE OF PAYMENT FOR SUPPLY OF LABOUR. THE REASONING ADOPTED BY THE COMMISSIONER (APPEALS), THOUGH SOMEWHAT IMPRESSIVE AT FIRST GLANCE, IS FALLACIOUS. THERE IS NO CAUSE AND EFFECT RELATIONSHIP BETWEEN WORKERS ASSIGNED BY THE CDLB HAVING EMPLOYER WORKMAN RELATIONSHIP WITH THE ASSESSEE, AND THE PAYMENTS BEING MADE BY THE ASSESSEE TO CDLB BEING NOT IN THE NATURE OF PAYMENT FOR SUPPLY OF LABOUR . 4. SINCE THE FACTS AND CIRCUMSTANCES ARE EXACTLY IDENTICAL, WHAT WAS BEFORE US IN KAMAL MUKHJERJEE & CO. (SHIPPING) (P.) LTD. (SUPRA) AND ALSO THAT IN THE CASE OF SMT. J. RAMA OF HON BLE KARNATAKA HIGH COURT (SUPRA), RESPECTFULLY FOLLOWING THE SAME, WE ARE OF THE VIEW THAT EVEN ORAL CONTRACT IS SUFFICIENT AND ADMITTEDLY THE ASSESSEE HAS TAKEN THE DUMPERS ON HIRE AND HE HAS PAID CHARGES FOR THE SAME. RESPECTFULLY FOLLOWING THE SAME, WE CONFIRM THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND REVERSE THE ORDER OF CIT(APPEAL ) . 9 ITA NO. 1240 /K/201 0 & C.O. NO. 97/KOL/2010 N. L. YADAV & CO. AY 200 5 - 06 FOLLOWING THE ABOVE CASE LAW, WE CONFIRM THE ORDER OF CIT(A) AND THIS ISSUE OF ASSESSEE S CROSS OBJECTION IS DISM ISSED. 9 . IN THE RESULT, BOTH THE APPEAL S OF REVENUE AND THE CROSS OBJEC TION OF ASSESSEE ARE DISMISSED . 10 . ORDER IS PRONOUNCED IN THE OPEN COURT . SD/ - SD/ - ( B. P. JAIN ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 9 TH APRIL , 201 5 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT ITO, WARD - 28(2), KOLKATA . 2 RESPONDENT M/S. N. L. YADAV & COMPANY, 9/5L, MUNSHIGUNJ ROAD, KOLKATA - 700 023 . 3 . THE CIT (A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .